Before you begin searching for a good warehouse space for rent for your company, you should to get informed about the commercial space leasing process. Being ready will keep you from making hurried decisions and costly mistakes you will regret in the future. The following are some insider tips to help make an informed decision when letting a commercial real estate your company
Initiate the process of finding commercial space for rent at least 6-12 months before your existing lease terminates or until your ideal move-in-date. Finding the correct space and negotiating the deal alonewill require 1-2 months depending on the size space and current market conditions. In most cases the spaces you like will need some sort of improvements which the time needed will depend on the scope of work.
Thoroughly examine your business’s present and future needs. Consult with the different department heads for input in addition to some key employees.
Get familiar with allthe commercial space terms and meanings. Various landlords state and quote things differently. If you’re in doubt about what they mean do not be afraid to ask them to provide more info.
If you’re not knowledgeable about the commercial leasing process or the present market conditions then consider engaging the assistance of a tenant agent. Their services do not cost you anything because landlords pay all of the leasing fees. The landlord agent will have an professional listing agent representing them so it would be a great idea for you to have one also.
Physically see all of the properties that meet your requirements so you can make a short list. Keep in mind that the designs can be reconfigured so don’t get stuck on that. Ask the landlord agents a great deal of questions about the ownership, property amenities, required lease term length, how much the landlord is prepared to give in tenant construction allowances, etc..
Don’t settle for the first commercial space you believe is acceptable for your requirements: continue searching until you have at least 2 to 3 alternative options. These extra options will work to your benefit since you will know what to expect throughout the lease negotiations and you will gain more leverage with numerous landlords competing for your company. They also give you something to fall back to whether the negotiations to your first choice go sideways.
Send out proposals to your top three to five options. These aren’t legally binding. You never need to take a landlord representative’s verbal note. Everything should be in writing.
To help you decide what property is best suited for your business, prepare a spreadsheet to do an apples to apples comparison of every property. Some of the things you need to consider include the size of the space, the asking base rental rates, the necessary lease duration, and the incremental expenses (taxes, insurance, maintenance, etc). You can also take note about the advantages and disadvantages of each property. If you’re budget conscious then you can quickly narrow down the list by simply calculating the monthly base rents for each property then eliminating those that are way over your budget. The monthly base rent is calculated by multiplying the industrial space square feet by the asking base rate and any operating expenses then dividing by 12.
If some of the commercial spaces need tenant improvements then it’s crucial that you determine what changes you want on each and get construction bids. This way if the landlord is offering a tenant improvement allowance you will know just how much out of pocket you will have to pay over and beyond what the landlord is prepared to give.
Carefully examine and compare the terms of each proposal. Consider whether it makes sense to go back to every landlord to negotiate additional concessions. Make sure you completely understand the total expenses you’re expected to cover. Don’t get emotionally attached to a certain property until the negotiations are over. Emotional attachment might lead to you signing a contract your business cannot live up to.
After negotiations are finalized and you’ve made your selection now it is time to have the landlord provide you the first draft of the commercial lease contract.
Now it is time to review the commercial lease contract. It would be wise for you to hire an attorney to review the lease. If you have a tenant representative then they could review the lease with you also. Industrial lease language could be negotiated. If you do not like certain lease items or want to propose new language today is the time to do so.
Once the end of lease contract negotiations has finished the landlord will give you a copy of the lease to review and sign.
There are many more things to consider when renting commercial property however these ideas will help get you started. If you’re a new business renting commercial space for the first time or an existing business who has only leased 1 or 2 spaces then consider getting help from a tenant agent. Their services don’t cost you anything and you will save a lot of money and time.